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Credit Card Debt | Debt consolidation | Interest Free Credit Cards | Bankruptcy | Debt Agreements |
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AVOIDING SPENDING YOUR LIFE BEING A CASH COW FOR OTHERS Are you really serious about paying off your credit cards and get these credit card companies out of your life for once and for all or are you happy to give these blood suckers money for the rest of your life and then have your kids have to give them money from the settlement of your estate when you die? How does the prospect of taking another 30 years to pay out your credit card debts appeal to you? Yep - about the same to me. The credit card companies would absolutely love you to death (literally) but that's what could happen if you only make the minimum credit card monthly repayments. Most credit card interest rates are at least three times the rate you pay on your mortgage! You must understand that the credit card companies in Australia don't allow you to pay back your credit card debt in small amounts out of the kindness of their hearts. This is the very basic way that they make their money and enslave you forever. Paying the minimum payment each month, guarantees that you will be filling the credit card company's cash coffers with your hard-earned money for many years to come. A lot of people think "fine...I'll play them at their own game and get a 12 month interest free credit card and then in another year I'll switch to another interest free one and so on". Play them at their own game? Wrong. To play the game you need to know the rules. You don't really think they haven't thought of that? If you do that you'll be charged the full interest from the previous year - uh oh - READ THE TERMS AND CONDITIONS BEFORE YOU SIGN UP. Here's where you start: refuse to pay the minimum amount. Demand of yourself that you pay much more than the minimum amount. Yes - DEMAND it of yourself. If you can't pay the minimum amount you should NEVER have bought whatever it was in the first place - regardless of whether it was a new TV, sound system, carpets for the house - that is IRRELEVANT. The payments you make in the "minimum monthly amount" includes an enormous amount of interest and just a little bit of the principal which is why it takes years and years and years to pay off the original debt. Do you really want to end up paying $7000 for that big screen TV that was priced at $2000? Well that's exactly what will happen if you continue to make the minimum monthly repayments. No wonder it feels like you can never get ahead. UNDERSTAND THIS: Getting out of credit card debt is not an easy road. It is quite hard and takes time and effort but that effort will be richly rewarded with the new lifestyle you will achieve in a relatively small space of time. Just two or three years of concentrated effort should pull it up. How long does it seem like to you from Xmas three years ago? Reining in your spending (reducing lifestyle) is NOT fun. But you MUST do it to make any progress. The only other way out is winning lotto (remote possibility) of getting an inheritance windfall from a long lost aunty - but even if that did happen, you'd soon be back in the same situation all over again with blown out credit cards - just read the many horror stories of many "lucky lotto winners". Here are some POSITIVE steps you can take: 1. ESCAPE COMPULSIVE CONSUMERISM Refuse to spend any more money and try and catch up. Become a non consumer - try everything you can NOT to be suckered in to the consumer society. Make it a new sub religion. Don't consume any more than you absolutely need to survive. Ignore all the ads on TV - endless aren't they? - that are there just to entice you to spend money and add to your credit card debt. Don't watch the stupid things. Watch non commercial TV instead if you have to - yes, I know the programmes aren't always mainstream, but variety is the spice of life. And by refusing to be brainwashed any more by commercial TV, you will end up spending less. You don't have to have the latest IPad to make your life complete. You can only wear one shirt at a time. You can only eat one meal at a time. If you do have an unexpected
gain, pay it off the credit card with the highest interest rate. You don't
know the interest rates on all your credit cards and store credit
cards? Why not? Can't you read the credit card statement they send you
every month or download to your email account every month? They live in grand mansions with heated swimming pools while you battle it out on struggle street. Who's the sucker? When was the last time one of these high flying corporate executives sent you a Xmas card or invited you over to their mansion (you're paying for it) for a Sunday afternoon barbeque? Stop supporting their credit card enriched lifestyles and start improving yours. Most of things you think you'd like to have can be bought later on if you decide you really must have them. You don't HAVE to put them on your credit card. If you need proof that a lot of those "must have" items are a waste of money, have a look at the bottom shelf of your kitchen cupboards. All those electrical appliances and gizmos that you never use any more? Just because something is on sale doesn't mean that you need it and the world is NEVER going to run out of "up to 70% off sales". They're there for the suckers - always will be. You have been brainwashed for years and years by all the radio, TV, newspaper and billboard adverting into a life of buy, buy, buy - use your credit card, have it now - why wait?. Accept that is so. Think clearly about it and decide to become a non consumer at all costs. Think about this: at the end of the day you will probably end up in a small hospital/hospice room that has a bed, TV and a small white cupboard beside the bed. Where are you going to put all the "stuff" then? 2. CUTTING UP THE CREDIT CARDS Save the credit card that costs you the least in interest and cut the rest up. No, not speaking metaphorically - REALLY cut the other credit cards up. You don't need them. I know, your head says Ï should keep them just in case even if I don't spend on them". Wrong! You will soon end up back in the good old ways and your credit card debt problem will go on and on in to the foreseeable future. Is that what you really want? If it is, why the hell are you bothering to read this page then? The smartest move you'll ever make in the battle against credit card debt is to minimise the number of cards you have. Remember, if you want to buy a house or refinance a house, your credit score is based on the TOTAL OF THE CREDIT CARD LIMITS you hold. Note: they don't care how little you owe on them, they only count up the maximum limits on the credit cards and you will find you are ineligible for housing loans if you have a large total of maximums on the credit cards you hold. Another consideration is
to maybe keep the oldest credit card you have as length of credit history
is one of the components "they" use in assessing your credit
worthiness in those reports they do on you when you are asking for credit
or a bank loan. By closing only your newest credit cards first, you make
your average credit card history older which is a good thing from the
lender's point of view. To make sure you don't keep impulsively splurging on the credit card you decide to keep, put it in a three quarter filled plastic cup of water and put it in your freezer. In that way it freezes solid and needs at least 12 hours at room temperature (probably 24) to thaw it out so you can use it. No, it won't "ruin it". However, be warned, trying to thaw it out in the microwave will wreck the card and make it useless. In this way you will at
least have a day to reconsider if you want to put that new "must
have"on the credit card. 3. CONSOLIDATE THOSE CREDIT CARDSShop around for credit cards offering exceptionally low interest rates and transfer the amount owing on your high interest rate cards to them. DO NOT then refill the credit cards you pay off. CUT THEM UP and throw them away. If you can, there are heaps of people out there offering to refinance and consolidate your credit cards in to one amount, generally with an attractive 6 to 12 month interest rate - this is probably your last chance to get on top of things in this introductory rate period so don't waste the opportunity. Spend the next 6 to 12 months doing nothing else but paying off this refinanced credit card amount. I know, 6 to 12 months of doing little else doesn't sound so appealing. But think about it - I am writing this in June - last Xmas seems a very short time ago. That is exactly how long it will seem when you get to the end of it. 4. THE TRUE EMERGENCY CREDIT CARD Put the one card you kept away in a safe but difficult to get at place for emergencies. You may just need it in the future. But use it only for real emergencies. A new wardrobe is NOT an emergency. A failed hot water system is. A new IPad is NOT an emergency. A blown up car motor is. 5. HOW MUCH DO YOU REALLY OWE? Total the money you spend each month paying off those credit cards - wow - wouldn't it be great to have that fun amount to play with every month. Well that's what you will have once you get rid of that accursed debt. Be single minded about this. Think of all the good things you and your family could do once a little bit of time passes AFTER you pay off those accursed things. And you could pay cash for them - not value plus 18 to 22%. Other people do this so why can't you? 6. WARNING SIGNS OF TOO MUCH CREDIT CARD DEBT: (Warning Will Robinson - warning - warning!)a) You don't even know how much credit card debt you are in. b) You have at least one credit card that is at or over the limit c) You only make the minimum payment each month on the credit cards d) You believe you are only one good Tattslotto win from fixing it all up e)You use cash advances to sustain your lifestyle f) You lie to friends and
family about your debt or, MORE IMPORTANTLY, you lie to yourself about
it. 7. ASK FOR A LOWER INTEREST RATE ON CREDIT CARDSGrab a bill from any account charging you more than, say, 14% interest. Dial the toll-free number on the bill and ask to have your rate reduced -- say, to 11%. Tell them that you'd really like to stay with them out of customer loyalty (embellish according to your acting skills), but that you have received offers for much-lower-rate or interest free transfer debt cards. Expect to be made to feel very uncomfortable, but stand firm and remember that, to them, you are both a customer and a cash cow. That's right - you are their profit centre and if they can't stop dipping in to your pocket every month. they go broke as well. And they don't want now do they? Gosh, how would they ever keep up the golf club memberships? You also stand to save a bundle. Remember the more calls you make, the more persuasive you'll become and the better you will become at this game. And don't think to yourself, "oh I could never pull that off", you would be amazed how many people do. And they are people just like you. And me. And yes I have done it. It does work. Just like sex, once you do it the first time it kind of comes naturally. If you never ring them and
ask, you'll never know what they would have said! And what's the worst
possible outcome from the credit card company? So they say no.... big
deal! As you pay down the amount owing on each credit card, make a point of reducing the limit to match the amount owed as it gets less and less. In that way, you will not be able to book up more debt on the cards. Yes, it a pain in the proverbial doing this on a regular basis but as you do it, you will come to realise just how much in debt you are and how much these credit card companies have been taking advantage if your credit addiction to feather their own well lined corporate nests. 9. REMEMBER THIS ABOUT CREDIT CARD DEBT One of the smartest moves you can make is to tell the credit card companies involved that you are in strife and need help. The last thing they want to do is have to deal with other Australian companies that do Debt Relief Management Agreements or the Official Receiver In Bankruptcy. Those are bad options for any credit card company with only the certainty of loss as a result for them and they will generally go out of their way to help you overcome your problems as there is then still some chance of profit. Ring them up and tell them
if you really are at the desperation/no possible other options stage. This really only works to your advantage IF you don't own real estate / shares etc etc. IF you own property you may be forced to sell it all up when you go bankrupt. The period of your bankruptcy in Australia is generally three years but they can extend this if they believe you have not made a genuine effort to satisfy your creditors BUT it does stop the generally unpleasant bill collectors dead in their tracks. There is a permanent record kept of your bankruptcy called the National Personal Insolvency Index which people can access on the payment of a fee. There are some restrictions on what you can do during the three year period but you can get full details on this online - just Google in "bankruptcy". Remember too that during the three year period your creditors are able to take and sell any assets you acquire INCLUDING any inheritances and, strictly speaking, you won't be able to hold a job that involves dealing with money. By the way, bankruptcy does not always solve the problem. If you are a compulsive spender / big noter / show off, you will be back in the same situation shortly after the bankruptcy period expires - so what's the point? Solve the underlying problems first for a long lasting solution problem to credit card debt. 11. AVOIDING BANKRUPTCYThe best way is through debt
consolidation loans and then making a genuine change in your lifestyle
patterns and get it paid off as soon as possible. There are companies
that work on your behalf to arrange Debt Agreements
between yourself and the credit card companies and others you owe money
to. They freeze the interest owed on all your debts (a killer in the whole
process) and it will then take, on average, three to four years to pay
the whole lot off. IT does, again, stop the debt collector in their tracks. Many Australian companies
advertise their services - yes, they make money out of you as
well, but not as much as the credit card companies, and you get
peace of mind to boot. But, you MUST make the payments you agree to or
it is a waste of time and only a fool wastes time. This is really quite a simple affair as the credit card companies can hardly wait to get you in their clutches again. Pay all your phone and telephone bills and rent etc right on time for 6 to twelve months and then go to someone like Radio Rentals and rent a TV for 6 months (whether you need it or not). Pay this every month on time and then you have them for a credit reference in the future. Do this with a few small store accounts etc etc and your credit rating will soon be back up to A+. But of course this time you will be in control of your credit card debt addiction and be able to control it with the value of hard earned hindsight. won't you?. 13.
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